College aid fix could be simpler

August 28, 2013

President Obama's proposal to control college tuition and quality is not exactly what we had in mind, but we're glad he's trying to solve the problem of runaway college tuition.

More specifically, we're glad he's making a connection between the grants and loans the nation gives students to go to college and the college they choose.

On July 19 we editorialized that since the federal government is indirectly subsidizing these schools through the grants and loans it gives their students, it should use that as leverage to bring those prices down. Some colleges contain their costs, like our own Paul Smith's and, of course, North Country Community College. But others spend lavishly on things like presidential salaries, buildings and sports teams while driving their tuition up and adding to their students' debt.

Many of these schools are run by states, which should control their own affairs. The rest are private and should be free to do that kind of thing - but with the taxpayers' money?

We suggested in July that the federal government say, "We won't loan students money to go to any college with tuition higher than X." We also suggested that the government require each school to offer a certain proportion of academic scholarships - serious ones, not just a couple thousand dollars - before issuing student loans there.

Since then we've learned some good news: Private colleges pay much more than we thought to help cover the costs of students who are academically qualified but can't afford the full sticker price. Paul Smith's President John Mills said the percentage of his school's students who receive scholarship or "discount" funding is in the high 80s. That money comes not only from alumni but from the school's operational budget. He said all but the elite colleges do that and that the national average for the "unfunded discount" is 46 percent of tuition.

So our second recommendation wouldn't be as hard to achieve as we thought.

Obama's plan would go further. He would have the Education Department rate colleges on their affordability as well as student success, using data such as graduation and transfer rates, graduates' incomes and how many go on to earn advanced degrees. Then he would tie those ratings to federal aid. Students at better-rated schools could get cheaper loans or bigger grants, while aid might be cut off for schools that aren't controlling costs, delivering quality education or opening their doors wide enough for low- and middle-income students.

We tend to agree with Rep. Bill Owens that the rating system would create unnecessary bureaucracy. It would also impose a "competency-based learning" curriculum on universities that, while perhaps beneficial, should come about organically.

It makes sense, though, that the American taxpayers get more assurance that their money that goes to universities - especially private ones - isn't wasted. That could, however, happen more simply than the way the president suggests.

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This is a uniquely American situation. Many other countries, such as Canada, give more of their tax dollars to higher education to keep tuition more affordable for everyone. In the U.S., we tend to have higher prices and more aid to fill the gaps for those who need it. It's similar with health care.

Our nation also has an unbelievable number of colleges - more than 3,000 private and 1,650 public, numbers that are steadily growing. One would think this fierce competition would lead to lower tuition prices. Rather, in the 25 years from 1987 to 2012, it doubled for private colleges and tripled for public ones, according to College Board statistics (obtained via Bloomberg).

Public universities are supposed to be the affordable option, but they're less so now. States' monetary support for its colleges fell 26 percent over the last two decades, Daniel Luzer wrote in Washington Monthly (April 13, 2012).

Perhaps states meant to pressure their colleges to be more efficient, and maybe that's happened somewhat. But what's also happened is tuition hikes.

As a result, student debt has grown, and as a result of that, federal student aid has grown, too - but not as fast.

States really need to step it up on education.

Happily, some problems will work themselves out without government intervention. Amid the last five years' down economy, with so many college graduates unemployed, students have more people warning them to major in something with good job prospects. Also, costs might drop as more education is available online. And the competency-based learning revolution that PSC President Mills loves is probably going to happen, like it or not, because more people are demanding verification that all that tuition money buys actual, measurable learning.

Amid all this, states can help by properly funding education from kindergarten to university, and the U.S. government can help by not paying students to go to the most expensive colleges.